Study Shows US Fund Managers Suffering

by Philip Morton, Investors Offshore.com

14 November 2001

A study conducted by executive search firm, Russell Reynolds, in the United States has revealed that compensation levels for mutual fund and hedge fund managers could be down by around a third on last years levels, following a terrible year for the stockmarkets.

'Revenues have gone down, profits have gone down, and the bonuses will go down more than the assets have gone down,' predicted Richard Lannaman, head of the firm's investment management practice. 'As a broad generalization, compensation could be down as much as 30% this year from last year's very high levels.'

According to a study conducted last spring by Russell Reynolds and the Association for Investment Management and Research, median pay figures for stock portfolio managers should have stood at around $436,500 this year. However, times have changed, and fund managers are now (almost) suffering alongside their investors.

Russell Reynolds has suggested that hedge fund managers in particular may be in for an unpleasant surprise, as although hedge funds in the US were generally up by around 2% in the first nine months of this year, average returns are at a five year low. 'The compensation for hedge fund managers will likely be down dramatically,' confirmed Mr Lannaman, warning darkly that hedge fund chiefs could see their multi-million dollar incentive fees reduced to hundreds or even tens of thousands this year.

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